Engineers Joint Welfare Fund v. C. Destro Development Co.
178 F. Supp. 3d 27
N.D.N.Y.2016Background
- Multi-employer benefit plans and the Union (Plaintiffs) sued C. Destro Development Co., Inc. and its principal Carmen Destro, Jr. (Defendants) under ERISA and the LMRA for delinquent contributions, union deductions, interest, liquidated damages, audit fees, and attorneys’ fees. Plaintiffs moved for summary judgment; Defendants did not oppose.
- Destro Development was bound by collective bargaining agreements requiring remittance of contributions and wage deductions for the period Sept. 1, 2006–Dec. 2012; audits showed $249,853.68 unpaid, reduced by credits to $223,031.88 in unpaid contributions/deductions. Separate earlier untimely remittances totaled $96,187.29.
- The Plans’ trust documents and Collections Policy treat unpaid contributions as delinquent and authorize interest, up to 20% liquidated damages, audit fees, and attorneys’ fees; rates vary by Fund (e.g., 2%/month, 9% simple, ERISA-prescribed rate).
- Court found Destro Development liable for $711,429.09 (unpaid contributions/deductions; interest; liquidated damages; interest on late payments; attorneys’ fees and costs) and Destro personally liable as an ERISA fiduciary for $181,904.84 (unpaid contributions and attorneys’ fees) — with post-judgment interest; certain requests (audit fees; prejudgment interest against Destro) denied without prejudice.
- Court reduced requested attorneys’ fees by 30% for failure to submit contemporaneous time records, lowered paralegal rate to $80, denied liquidated damages for untimely payments without adequate justification, and denied audit-fee awards for lack of detail.
Issues
| Issue | Plaintiffs' Argument | Defendants' Argument | Held |
|---|---|---|---|
| Liability for unpaid plan contributions and union deductions | Destro Development breached ERISA § 515 and LMRA § 301(a) by failing to remit audited amounts ($223,031.88) | (No opposition) | Summary judgment for Plaintiffs; Destro Development liable for $223,031.88 unpaid contributions/deductions |
| Interest and liquidated damages on unpaid contributions | Seek interest under ERISA § 502(g)(2) and liquidated damages per plan terms (up to 20%) | (No opposition) | Awarded interest ($232,640.63 through 6/5/2015 and continued to judgment) and liquidated damages ($220,346.79); awards to be adjusted through judgment date |
| Interest and liquidated damages for untimely (but paid) remittances | Seek interest and 20% liquidated damages per Collections Policy and CBAs for 2006–2008 late payments | (No opposition) | Awarded $2,582.29 in interest on late payments; liquidated damages for late payments denied without prejudice (Plaintiffs failed to show 20% is reasonable forecast of harm) |
| Individual fiduciary liability of Carmen Destro under ERISA § 409 | Destro exercised control over payments and plan assets; therefore personally liable for losses and equitable relief | (No opposition) | Destro liable as fiduciary for four Funds where unpaid contributions were plan assets; awarded $149,076.90 (unpaid contributions) and $32,827.94 in attorneys’ fees; total $181,904.84 |
| Attorneys’ fees, costs, and audit fees | Seek full recovery of attorneys’ fees, costs, and audit fees per ERISA § 502(g)(2) and plan documents | (No opposition) | Awarded $32,827.94 in attorneys’ fees and costs (after rate/risk and 30% reduction for no contemporaneous time records); audit fees ($18,320.77) denied without prejudice for inadequate detail |
| Prejudgment interest against individual fiduciary under § 409 | Seek prejudgment interest using plan investment returns to make plans whole | Insufficiently opposed | Request denied without prejudice — Plaintiffs failed to prove appropriate investment-return rates for full period claimed |
Key Cases Cited
- Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241 (2d Cir. 2004) (unchallenged facts in local-rule context may be deemed admitted)
- Celotex Corp. v. Catrett, 477 U.S. 317 (Sup. Ct. 1986) (summary judgment standard: movant bears initial burden)
- Diduck v. Kaszycki & Sons Contractors, Inc., 974 F.2d 270 (2d Cir. 1992) (prejudgment interest under ERISA to compensate for use of withheld funds)
- N.Y. State Ass’n for Retarded Children v. Carey, 711 F.2d 1136 (2d Cir. 1983) (rule requiring contemporaneous time records for fee applications)
- Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (Sup. Ct. 2010) (fee awards in ERISA actions require some degree of success)
- Bricklayers & Allied Craftworkers Local 2 v. Moulton Masonry & Constr., LLC, 779 F.3d 182 (2d Cir. 2015) (standards for fiduciary liability under ERISA and treatment of unpaid contributions as plan assets)